Hybrid Governance of State-owned Enterprises

Abstract

The governance of state-owned enterprises (SOEs) is hybrid in nature as it combines mechanisms of public administration, informal political interference, and standard corporate governance. While researchers often consider social enterprises as hybrid organizations and offer a favorable evaluation of these hybrid characteristics, the similar characteristics in SOEs are oftentimes viewed as their vulnerability. Prior discussions about SOE governance tend to focus on standard corporate governance mechanisms and treat the distinct SOE governance practices as “deviations” from these standard governance mechanisms. By considering SOE governance as hybrid, we bring attention to the existence of alternative governance mechanisms that the state can rely on, such as governance through performance contracts, intermediate ownership structures, and informal influence by politicians. We examine governance hybridity from a variety of theoretical perspectives used in prior research on SOE governance. We also discuss how hybrid governance arrangements in SOEs vary within and across countries. We conclude the chapter with directions for future research on the hybrid governance of SOEs.

Role of a board of directors and corporate governance in a state-owned enterprise

“…Members believed that the Chairman encouraged a boardroom culture which fostered diverse views, critical debate and ventilation of issues consistent with Okhmatovskiy et al (2021). However, interaction varied depending on BODs’ involvement (Minichilli et al , 2009; Bezemer et al , 2014).…”

“…Although politically connected, BODs believed that they dispatched their duties with some measure of independence, integrity and virtue. The Chairman created a boardroom culture that gave voice to BODs (Okhmatovskiy et al , 2021). This seemed to be fruitful in addressing issues; nonetheless, BODs stressed that the long decision-making process led to mental fatigue.…”

“…BODs also have the power and independence to make judgements to enhance effectiveness (Frederick, 2011) However, the extent of each BODs' participation and the decision-making process is dominated by the Chairman who influences decision-making by fostering culture and using persuasion (Okhmatovskiy et al, 2021). The Chairman also maintains board efficiency and functions as government's representative on the board (McNulty and Pettigrew, 1996;OECD, 2015).…”

The Phenomenon of Hybrid State Capitalism in Emerging Market Economies: Present and Future

“…At the same time, most national economies with emerging markets represent a hybrid system, where economic sectors with an integral presence of the state complement the sectors of private business, corporate and otherwise. The author relied on recent publications, in which the phenomenon of the hybrid design of the national economic system in the current period received intent attention (Nolke, 2018;Alami & Dixon, 2020Okhmatovskiy et al, 2021;Ricz, 2021).…”

“…In fact, there is an imposition of heterogeneous institutional orders, reflecting the multi-layered structure of interactions among market and other agents. In the context of the foregoing, an unambiguous statement is appropriate: In recent years, the national economic system in the existing EMEs was interpreted by researchers precisely as a hybrid one (Nolke, 2018;Okhmatovskiy et al, 2021;Ricz, 2021). It is fundamentally deviated from the traditional bipolar capitalist and socialist systems that existed in the past century.…”